L03 - Announcements The Market Adam Smith(17231790 moral philosopher pointed out the virtues of the market Reading for today text Chapter 3 Reading

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9/18/2011 1 Announcements Reading for today text Chapter 3 Reading for Monday text Chapter 4 Homework 1 Solutions are posted Complete the homework before section The Market Adam Smith (1723 1790) moral philosopher, pointed out the virtues of the market The Wealth of Nations “He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. ..., he intends only his own security; . .., he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” The Market Alfred Marshall (1842 1924) constructed the first coherent presentation of microeconomic theory Principles of Economics “The most valuable of all capital is that invested in human beings.” Goal ‐‐‐ construct a basic and powerful model that explains the determination of price and quantity purchased and produced Model demand and supply Model the market using Demand curve Supply curve Notion of equilibrium as a prediction of price and quantity The Market The Market In applying our tools, we have to specify the market we are analyzing What–for example “crude oil” Where–for example “in the U.S.” When–for example “during the early 1970’s” Assumptions Individual buyers and sellers are too small to affect the market No barriers to entry into the market The products in the market are homogenous: every one is exactly alike Information: everyone knows everything about the product and the price
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This note was uploaded on 02/13/2012 for the course ASTRO 101 taught by Professor Hartmann,bergin during the Winter '08 term at University of Michigan.

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L03 - Announcements The Market Adam Smith(17231790 moral philosopher pointed out the virtues of the market Reading for today text Chapter 3 Reading

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